Today the Eighth Circuit revived a jury’s award of actual and punitive damages against Orkin Extermination for fraudulently representing the effectiveness of a termite treatment in the home of a Hawkeye State couple.  The district court tossed the award because, it concluded, evidence of Orkin’s net worth improperly affected the compensatory award of $138,000 and that the record didn’t support the finding of willful or wanton conduct necessary for awarding punitive damages.  The appeals court disagreed and ordered reinstatement of the $138,000 in actuals plus $276,000 in punies.  Schooley v. Orkin Extermination Co., Inc., No. 06-3326 (8th Cir. Sept. 19, 2007) (applying Iowa law).

Barry Barnett

Contrary to rumor, our feed does not have ants in its pants.

Do you know pig Latin? 

O-Day ou-yay ow-knay ig-pay atin-Lay?

Blawgletter doesn’t either.  But some federal judges appear to ow-knay ow-hay o-tay iss-may e-thay oint-pay. 

So it happened oday-tay when a court of appeals affirmed dismissal of a complaint because, it concluded, a state court had dismissed the same claims before the plaintiffs non-suited their state court case.  The issue, in our view, came down to whether the state court’s post-non-suit entry of a "Corrected Final Judgment" affected the, er, finality of a previous "order" that "DISMISSED" the "case".  The panel held that the earlier order did indeed constitute a final judgment for purposes of res judicata and collateral estoppel.  But it said bupkes about the impact of correcting the order on finality.  Orris-nay ersus-vay E-thay Earst-hay Ust-tray, No. 05-20710 (5th Cir. Sept. 18, 2007).

Perhaps e-way iss-may e-thay oint-pay.  But we don’t think o-say.

Barry Barnett

Orry-say.

As Blawgletter noted earlier today, the Second Circuit held that the New York Stock Exchange lacks "absolute immunity" as a quasi-governmental regulator if it makes false representations about securities trading.  The en banc Eleventh Circuit reached the same conclusion, 12-1, with respect to another securities exchange, the NASDAQ.  The complaint alleged that NASDAQ deviated from its role as a self-regulating organization by falsely "touting" WorldCom stock.  Weissman v. Nat’l Ass’n of Securities Dealers, Inc., No. 04-13575.

Barry Barnett

Our feed touts its own horn.

On the day after reports of William Lerach’s impending guilty plea, he prevailed for his clients in an appeal from an order dismissing a securities fraud complaint.  The Second Circuit today upheld the district court’s conclusion that the New York Stock Exchange enjoyed absolute immunity for missteps as a quasi-governmental regulator of securities traders.  But the court ruled, contrary to the district court, that the investor plaintiffs had standing to sue the NYSE for stock fraud arising from the exchange’s representations about the integrity of the trading system.  In re NYSE Specialists Securities Litig., No. 06-1038 (2d Cir. Sept. 18, 2007).

The victory may prove illusory — or at least brief.  The court pointed out "that Lead Plaintiffs’ Rule 10b-5 claims do not appear to be of the nature where the fraud-on-the-market theory would apply, where the misrepresentation itself affects the market price of the security purchased."  Slip op. at 24.  The panel also mentioned that the NYSE may enjoy immunity for misrepresentations as a "self-regulating organization" or SRO.  Id.

Barry Barnett

Our feed can give your practice a booster shot.

The Assistant Attorney General for Antitrust, Thomas O. Barnett, suggested yesterday that the European Court of First Instance went too rough on Microsoft when the CFI upheld a $689.7 million antitrust fine.  "We are," he said in a press release, "concerned that the standard applied to unilateral conduct by the CFI, rather than helping consumers, may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition."  He added that "U.S. courts recognize the potential benefits to consumers when a company, including a dominant company, makes unilateral business decisions, for example to add features to its popular products or license its intellectual property to rivals, or to refuse to do so."

Blawgletter can’t imagine that European Union antitrust enforcers will view Barnett’s statement as constructive.  Although Barnett pointed to the Antitrust Division’s "wide-ranging and positive relationship with the EC on antitrust matters", U.S. enforcement policy has laxened as the EC has enlivened its own. 

A tell-tale sign:  The EC continues to uncover price-fixing and market allocation cartels while the Antitrust Division occasionally stumbles over one.

Barry Barnett

Vigorous antitrust enforcement gives us joie de vivre.

Bill Lerach in happier days.

Nathan Koppel reports in the WSJ that securities class action lawyer William Lerach, 61, has agreed to plead guilty to a single count of conspiracy.  If a judge accepts the deal, Mr. Lerach will serve one to two years in prison, according to the report, which also mentions that the government won’t pursue charges against Mr. Lerach’s spin-off firm, Coughlin Stoa Geller Rudman & Robbins LLP. 

The plea relates to Mr. Lerach’s time with his old firm, Milberg Weiss, and appears to involve allegations that the firm paid kickbacks to class representatives.

Update:  The NYT adds details about the Lerach plea arrangement:

• Mr. Lerach will make his guilty plea in Los Angeles federal court.
• He will forfeit $7.75 million and pay fines of $250,000. 
• The plea will identify Dr. Steven G. Cooperman as the receiver of "secret payments" from Milberg Weiss in return for Dr. Cooperman’s agreeing to serve as a class representative in securities fraud cases.

Blawgletter supposes that some people will say Mr. Lerach deserves opprobrium and criminal punishment and that others will argue the government overreached by destroying the career of a prominent class action lawyer and threatening the existence of his former firm.

We’ll leave such judgments to those who know more than we do about the facts.  But we do wish to point out that the viability of making "secret payments" in securities class actions probably ended years ago, not least because of the Private Securities Litigation Reform Act of 1995.  The PSLRA required federal courts to prefer institutional investors in appointing the "lead plaintiff" in each case.  It also mandates that the lead plaintiff certify the absence of arrangements for him, her, or it to receive extra benefits from the class action.  So we doubt that Mr. Lerach’s fall signals a flood of similar criminal charges.

We also want to draw your attention to an irony of the case.  Many saw the PSLRA as a way to punish and possibly kill Milberg Weiss.  Apparently, proponents thought that giving a leg up to institutional investors would result in whiter shoe firms representing class plaintiffs instead of renegades like Milberg Weiss.  But it didn’t work; in fact, the PSLRA had the opposite effect, catapulting Milberg Weiss into more and bigger cases as they successfully cultivated relationships with huge pension funds and other large investors.

So, in a way, we can see the point of those who would criticize the government for doing through prosecution what Congress failed to do through legislation.  But neither can we excuse criminality.

Barry Barnett

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Hollywood turned Erle Stanley Gardner’s Perry Mason
into a hottie.

SAN JOSE DEL CABO, BCS:  This morning Blawgletter attended a presentation about what jurors nowadays expect to see in trials.  The event featured not only the Trial of Socrates but also video clips from Perry Mason, Judge Judy, CSI, Boston Legal, and Shark.  Wow.

We won’t try to review the whole thing; its awesomeness defies adumbration.  But we do offer a chronology of how television has depicted trial lawyers over the years:

1. The White Hat Era.  Perry Mason digs out the truth.  He looks svelte and sexy.  He also always wins.
2. White Shades to Gray.  LA Law shows likable but fallible men — and women — who try cases and also do other stuff.  Often with sexy results.
3. Black Hat Time.  The nitty-gritty world of high pay, endless hours, and ruthless determination to win comes to the fore.  Also moral relativism.  Lawyers battle against corporations but also serve them.  Nobody comes out looking great.  Even sex seems a tad grim.

To what extent do the depictions reflect reality?

Do you really think that we’d tell you if we knew? 

Actually, we would.  We just don’t.

But we do think that the connection between fiction and actual fact doesn’t matter.  Twenty-first century jurors start out seeing you not as a truth-telling seeker of justice but as a money-making manipulator of the justice system.  You must convince them otherwise.

How?  Keep reading Blawgletter, all ye in whom the force remains strong.

Barry Barnett

Our feed loves turn-arounds.

Blawgletter reminisced today about an odd-sounding tort that we vaguely recall as commercial in nature — trespass to chattels.  You know, exercising dominion over movable property to which somebody else has a superior possessory right.

What brought the memory rushing back?  Why, O.J. Simpson’s arrest in Las Vegas yesterday, of course.

O.J. now resides in the Clark County Detention Center because, according to the charges, he committed "two counts of robbery with a deadly weapon, two counts of assault with a deadly weapon, and one count each of conspiracy to commit burglary and burglary with a firearm."  Mr. Simpson has said that taking stuff from a memorabilia dealer’s room in a casino hotel amounted to getting back things that really belonged to him.

O.J. does know about how the civil justice system supplements the remedies available on the criminal side.  He beat a murder rap in 1995 only to suffer a $33.5 million civil judgment in a wrongful death case two years later.  The jury found that he’d taken two lives that, uh, didn’t belong to him either.

Happily, we somehow doubt that resort to commercial law will prove necessary in this case.  Prison time will do just fine.

Barry Barnett

Our feed tackles big issues.